SouthAfrican FootballAssociation...FIFA and the 2010 FIFA World Cup Legacy Trust have continued to assist with capital improvements to the National Technical Centre to assist the Association

South AfricanFootball Association

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3

In December 2017 Coach Thabo Senong's charges hoisted the COSAFA Under 20 Championship trophyin Zambia. Amajita beat Mauritius, Mozambique and guest nation Egypt in the Group Stages. Egypt werebeaten a second time in the semi-final before Lesotho succumbed 1 – 2 in the final. Amajita have nowbeen crowned champions in this regional tournament in 2002, 2004, 2006, 2008, 2009, 2013 and 2017.

FFOORRAAMMAAJJIITTAACCOOMMEESSHHOOWWYYOOUURRLL VVEE

GGoovveerrnnaannccee RReeppoorrttss

South African Football Association 2017 – 2018 Annual Financial Report

On behalf of my fellow Audit and Risk Committee members, I would like to report on our assessment ofthe 2018 financial year. The Association and Group are both under material financial and cash flow stress,which is mainly due to the reduction in revenue caused by the challenge the Association is faced with inrelation to the broadcasting rights contract. The Association though, is mitigating this by applying strictcontrols and measures to contain cost, to limit this to the least possible impact to the Group’s financialposition, results and cash flows.

We continue to assess our risk and systems of the Group and we would like to assure you that the Group’ssystems of internal controls and risk management programme are sound.

The Group continues to receive unqualified audit opinions from its auditors. This is a culmination of theeffectiveness and efficiency of the systems and internal controls that have been in place throughout thefinancial year. The Committee met four (4) times during the financial year to carry out its functions as prescribed by the SAFA Constitution and its Terms of Reference. The members demonstrated their commitment by attending most of the meetings and participating intensely.

The Committee continuously assessed the Group’s systems of internal controls. We ensured that theseare appropriate and adequate for the Group and also that they are being implemented throughout theyear. The Committee continuously assessed the Group’s risk profile and ensured that appropriate measures are taken to deal with any risk. The Committee is comfortable that proper and appropriatesystems and internal controls are in place throughout the Group.

The Committee ensured that the Group financial statements for the year ended 30 June 2018 are prepared in compliance with all applicable statutory, legal and regulatory requirements and based on theInternational Financial Reporting Standards (IFRS). The Committee was also actively overseeing the external audit process by PwC. This included approving the audit plan, monitoring the audit progress andreviewing PwC’s final report including the management report.

The Committee is further satisfied with the statutory compliance by the Association and the Group. Theseinclude compliance with the Income Tax Act, Value-Added Tax, Employees Tax, Compensation for Occupational Injuries and Diseases, Broad-Based Black Economic Empowerment and Employment Equity.

The Committee is therefore glad to confirm the following results for the Group:

Financial position: Total assets R190.1mNet current liabilities R120.3mRetained earnings R12.3m

Financial performance: Loss from operations R19.6mLoss for the year R15.9m

Cash flow: Cash generated from operations R12.0mNet cash flows from investing activities (R8.3m)

We would like to thank the Council for the confidence that it has shown in our Committee.

4

It is with great disappointment that we have to report a Group loss of R15.9 million during the pastfinancial year. A number of factors have contributed to this poor financial performance.

First, the non-conclusion of the broadcast contract with the public broadcaster, the SABC, has contributed immensely to this underperformance. More disturbing is that, at the time of writing thisreport, the protracted negotiations were still under way. The negotiations have been prolonged by thefrivolous offer we received from the SABC. We are locked into these negotiations with the SABCbecause football is classified as a sport of national interest in our country, and therefore has to be accessible to the public through the public broadcaster. Given the recent experience with the publicbroadcaster, we have made submissions to both the Government and ICASA that we would supportan open bidding and selling of broadcast rights. Alternatively, we would support the amendment ofthe current legislation to necesitate a minimum fair market rights fee obligation.

Secondly, the smear campaign against the Association and its leadership during the past financialyear has not assisted the general performance of the organisation. The campaign was coordinated bya fringe group within and outside football who wanted to obtain control of SAFA to advance its ownagenda. This should be a lesson to all of us and it should be avoided and not repeated at all costs.This Association cannot afford to demolish itself and start afresh every time leadership has to beelected.

Despite these setbacks, we are determined to pursue our goals as guided by our Vision 2022. Although we foresee a difficult year ahead, we are confident that we will recoup this loss and returnto generating surplus by the end of the financial cycle. Our resolve is to build a sustainable and successful organisation.

Let us thank all our friends, sponsors and supporters who have been with us through thick and thin.Wishing you all the best for the future.

Mr Thamsanqa Gay Mokoena

Chairman: Finance and Procurement Committee

Mr Mxolisi Sibam

Chairman: Audit and Risk Committee

5

AAddmmiinniissttrraatt iioonn RReeppoorrttss

2017 – 2018 Annual Financial Report

The past financial year has no doubt left us with much to think about, and in particular as to how we needto manage ourselves moving forward into the next financial period and beyond.

Whilst we are continuously striving to be a world class organisation, we will have to do some introspectionin our overall operational methods, and therefore cannot continue business as if everything is normalaround us. The depressing economic climate challenges us to do business differently, and we need totake heed and change our approach to ensure that the sustainability of the Association and its future isuppermost on our agenda.

The challenges created by the SABC’s unwillingness to meet the modern day demands of an ever-changingbroadcast landscape, placed us in a very invidious position financially, but based on our confidence in ourbrand and its value in the market place, we are firm in our belief that we will be able to turn the cornerand come out victorious.

The turnaround strategy that is being worked on and developed, will be further adapted to create achanged environment to ensure that our organisation is rightsized at every level, and operated at optimalmeans for greater efficiency, productivity and effectiveness. We also remain confident that the ongoingsuccess of the majority of our teams will create a more vibrant appetite for corporate South Africa to become involved with the Association, and further stimulate financial growth.

We are thankful to our Members for being considerate during these challenging times, given that thebroadcast stalemate has also affected their operations negatively.

To our sponsors who have stood by us and increased their support, and to the new ones who have joinedrecently, we are grateful for your continued involvement with the sport of the nation.

In respect of the SAFA Council, led by the visionary Dr Jordaan, thank you for your support during thesedifficult times and for providing guidance at a critical stage of VISION 2022.

Mr Russell Paul

Acting Chief Executive Officer

7


The financial performance of 2017/18 was mainly characterised by cash flow challenges which werecaused by late payments from some of our major funders and the delayed conclusion of our broadcastdeal. This had an adverse and serious effect on most of our stakeholders, especially our Regions andservice providers. We are working tirelessly to rectify this situation because it is negatively affectingthe development of football. It is paramount that we secure unencumbered cash flows to enable usto liquidate our mounting liabilities. Our reported Group loss of R15.9 million is at variance with ourbudget for the same period, wherein we anticipated a surplus of R12 million. The failure to achieveour budget mainly arises from:

• the unanticipated delays in renewing the broadcast contract with the South African Broadcasting Corporation (SABC).

• we hosted 4 (four) Congresses contrary to the one (1) Congress that we had planned for.

• Our Junior teams were very active during this period. The U-20 Men (AFCON qualifiers anda Three Nations Tournament in England), U-17 Girls (World Cup Qualifiers) and U-20Women (World Cup Qualifiers) were all involved in tournament qualifying matches.

• Legal costs

We are still concerned about our net current liabilities position, which simply means that our currentliabilities exceed our current assets. The consequences of this have been felt across the Associationthrough the cash flow challenges. The key solutions to our situation are:

• we need to raise a significant amount unencumbered cash through sponsorships, financial assistance programmes, grants for existing operational costs, etc.

• acquire funding for unfunded mandates which include some national teams and some development programmes

• bridge the financial gap for partially funded mandates

The current global economic situation is gloomy and, consequently, corporates are scaling down onsponsorships which most view as social investment or philanthropy. In addition to positioning ourvalue offerings such that they become an integral part of our partners’ / sponsors’ strategies to achieving their business imperatives, we urgently need to diversify our revenue streams. This will go

9

Mr Gronie Hluyo

Chief Financial Officer


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Compliance is crucial to the Association and collaborating within the business has assisted with

compliance monitoring and risk management.

Finance has enhanced digital which has improved efficiencies and resulted in more effective

communication and reporting.

FIFA and the 2010 FIFA World Cup Legacy Trust have continued to assist with capital improvements to

the National Technical Centre to assist the Association in its ambitions in building a world class Technical

Centre. The National Technical Centre provided accommodation for Junior National Teams, officials and

hosted coaching and referees workshops.

Over the last year, the Association encountered challenging cash flow conditions but still managed to

meet their commitments, employee costs and made arrangements with the larger service providers.

We are constantly improving and developing our own processes to keep up with the fast paced

technology transformation.

Our thanks go out to the Financial Platform team and the SAFA leadership for their guidance over the

past years.

I trust that the Financial Platform has brought transparency and has contributed towards the Association

in meeting its objectives for Vision 2022.

1110

a long way in achieving less reliance on sponsorship income within the tough economic environment. Wealso need to streamline our operations so that we achieve greater efficiencies. This process should includerightsizing of our organisation, increasing the automation of our processes,introduce disruptive technologywithin our business operations and create an efficient and effective corporate structure. The low hanging fruitsthat we have already embarked on are an electronic learning (e-learning) system for all our courses and anautomated Procurement system.

The Group has a very strong non-current asset base which includes properties, financial assets and intangibleassets. We are designing various strategies to sweat our assets and, in broad terms, these include:

• maximise the utilisation of SAFA House, National Technical Centre, including Fun Valley and theAlexandra Total Sports facility

• pursue economic empowerment arrangements similar to our interest in the Netcare’s HealthyLifestyle Trust and the ownership of shares as Black Economic Empowerment beneficiaries

• we have numerous registered trademarks in many classes and these trademarks are dear to the South African public. We are in the process of exploiting our trademarks’ commercial values throughthe licensing and merchandising programme.

Lastly, I would like to thank the Finance & Procurement Committee and the Audit & Risk Committee for theircontinued guidance on finance matters.

Mr Gronie Hluyo

Chief Financial Officer continued...

Mr Jaco van der Walt

EY Financial Platform Leader


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1312

ASSETS

Current Assets 57Non-current assets 133

LIABILITIES AND RESERVES

Current Liabilities 178Reserves 12

ASSETS

Current Liabilities 175Reserves 12

LIABILITIES AND RESERVES

Current Assets 61Non-current assets 126

REVENUE 2018FIFA Legacy Trust Grants 50Host Cities 5Sponsorships 148Television Broadcasting Rights 93National Technical Centre 7Ticketing Revenue 1Other Income 2

EXPENSES 2018Other Admin Expenditure 149National Teams 84Football Development 41National Technical Centre 6Competitions & Leagues 32Governance 10

LOSS –16

SAFA IncomeStatement –Revenue(ZAR Million)

2014: 2822015: 3302016: 2872017: 3412018: 293

SAFA IncomeStatement –Expenses(ZAR Million)

2014: 2732015: 2842016: 3322017: 3182018: 311

SAFA IncomeStatement –

Result(ZAR Million)

2014: 102015: 462016: – 452017: 232018: –18

SAFA IncomeStatement –Reserves(ZAR Million)

2014: 62015: 522016: 62017: 302018: 12

REVENUE 2018FIFA Legacy Trust Grants 50Host Cities 5Sponsorships 135Television Broadcasting Rights 93National Technical Centre 1Ticketing Revenue 1Other Income 2

EXPENSES 2018Other Admin Expenditure 138National Teams 84Football Development 41National Technical Centre 5Competitions & Leagues 32Governance 11

LOSS –18

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South African Football Association 2017 – 2018 Annual Financial Report 1514


South African Football Association

Council’s Responsibility Statement

The Council is responsible for the preparation and fair presentation of the Group financial statements and financialstatements of South African Football Association (the “Association”), comprising the statements of financial positionat 30 June 2018, and the statements of profit or loss and other comprehensive income, changes in equity and cash flowsfor the year then ended, and the notes to the financial statements, which include a summary of significant accountingpolicies and other explanatory notes in accordance with International Financial Reporting Standards. In addition theCouncil is responsible for preparing the report of the Council, statement on corporate governance and composition ofthe Council.

The Council is also responsible for such internal controls to enable the preparation of financial statements that are freefrom material misstatement, whether due to fraud or error, and for maintaining adequate accounting records and aneffective systemof risk management.

The Council has made an assessment of the Association and its subsidiaries ability to continue as going concern and forthe reasons stated in the report of the Council believe that the Association and its subsidiaries will be going concern inthe year ahead.

The Council believe that the Group has, or has access to, adequate financial resources to continue in operation for theforeseeable future and accordingly the annual financial statements have been prepared on a going concern basis (referto note 21: Going concern). The Council has satisfied itself that the Group is in a sound financial position and that ithas access to sufficient borrowing facilities to meet its foreseeable requirements. The Council is not aware of any newmaterial changes that may adversely impact the Group. The Council is also not aware of any material non-compliancewith statutory or regulatory requirements or of any pending changes to legislation which may affect the Group.

The auditor is responsible for reporting on whether the Group financial statements and Association financial statementsof the South African Football Association are fairly presented in accordance with the applicable financial reporting framework.

Approval of the Group annual financial statements and Association financial statements

The Group financial statements and Association financial statements of the South African Football Association for theyear ended 30 June 2018 as identified in the first paragraph were approved by the Council on 19 November 2018 andare signed by:

17

Dr Danny A. JordaanPresident

Mr Russell PaulActing Chief Executive Officer

AAnnnnuuaall FFiinnaanncciiaall SSttaatteemmeennttss


The Council supports the principles incorporated in the Code of Corporate Practices and Conduct as set out in King Codeof Corporate Practices and Conduct. By supporting the Code, the Council has recognised the need to conduct the Association with integrity and to issue financial statements which comply with International Financial Reporting Standards.

Group financial statements and Association financial statements

The members of the Council are responsible for preparing the Group financial statements and Association financialstatements in a manner which fairly presents the state of affairs and results of the operations of the Group and the Association. The financial statements are prepared in accordance with International Financial Reporting Standards. Thesignificant accounting policies adopted in the preparation of these group financial statements and association financialstatements are set out in the accounting policies in the financial statements.

The Council is also responsible for the assessment of the Association and its subsidiaries ability to continue as a goingconcern.

The auditor’s responsibility is to express an opinion on these financial statements based on an audit conducted in accordance with International Standards on Auditing.

Internal controls

The members of the Council are responsible for maintaining adequate accounting records and for taking reasonablesteps to safeguard the assets of the Association and its subsidiaries to prevent and detect fraud and other irregularities.The internal controls implemented operated effectively throughout the year.

Audit and risk committee

The committee members are appointed by the Council.

The committee has met regularly over the past year to discuss accounting, auditing, internal control and other financialrelated matters. The committee provides a forum through which the independent auditor reports to the Council.

Finance and procurement committee

The committee members are appointed by the Council.

The committee has met regularly over the past year to discuss accounting, auditing, internal control and other financiallyrelated matters.

1918


Composition of the CouncilAt the date of this report the composition of the Council was as follows:

The above members, save for the position of the Chief Executive Officer, Honorary Presidents, Honorary Members andNational Soccer League Representatives, were elected onto the Council on 26 May 2018. In terms of paragraph 13.23of the Association’s Statutes, these members will hold office for a period of four years.

Futhermore, the following members were not re-elected during the elections held on 26 May 2018:

Elvis ShishanaLucas NhlapoAbel RakomaAnthony ReevesDavid ZuluMlungisi BushwanaMzimkhulu NdleloNomsa MahlanguNorman ArendsePeter ManchonyaneStanley MatthewsTruman PrinceVelaphi Kubeka


Council’s Statement on Corporate Governancefor the year ended 30 June 2018


PresidentDanny Jordaan

Vice PresidentsGay Thamsanqa MokoenaIrvin KhozaRia LedwabaXolile Nkompela

Chief Excecutive OfficerDennis Mumble (until 30 September 2018)Russell Paul (Acting CEO from 01 October 2018)

Honorary PresidentsLesole GadinabokaoMolefi Oliphant

Honorary MembersJeremiah MdlaloseMotebang MoseseObakeng Molatedi

MembersAndile NgconjanaAnastasia TsichlasAubrey BaartmanBennett BaileyDavid BantuDavid MolwantwaEmma HendricksGerald DonGladwyn WhiteJack MalulekaJose FerreiraKaizer MotaungKwenzakwakhe NgwenyaLetima MogorosiLinda ZwaneLitheko MaragoMato MadlalaMbongeni ShibeMonde MontshiwaMzimkhulu FinaMxolisi SibamMzwandile MaforvanePaseka NkonePius NqandelaPoobalan GovindasamyShuping SebokoSimphiwe XabaTankiso ModipaThabile MsomiVincent RamphagoWilliam Mooka



1. Nature of business

The South African Football Association (“the Association”) is the governing body for football in South Africa. Its mainaim and objectives are to promote, advance, administer, co-ordinate and generally encourage the game of football inSouth Africa in accordance with the principles as laid down in the statutes of FIFA. There was no major change in thenature of the business of the Association during the year. The Association has subsidiaries which collectively are referredto as the Group.

2. Financial results

The Group’s results, comprising the Association and its subsidiaries, are contained in the attached financial statements.The Group incurred a loss of R15.9 million (2017: profit of R21.9 million). The Group’s financial position reflects a netasset value of R12.3 million (2017: R28.2 million). The Group’s financial performance is unsatisfactory and this is mainlydue to the unforeseen gap in the SABC sponsorship during the months of May and June 2018; in other words, the SABCbroadcast rights terminated on 30 April 2018 and were not renewed immediately, therefore, there was no revenuefrom the SABC to be recognised for the last 2 months of this financial year. We also had a total of 4 (four) Congressesduring this financial year and this is unusual. In addition, the Africa Cup of Nations 2013 Local Organising CommitteeSouth Africa NPC (“AFCON”) also contributed negatively, however the South African Football Association DevelopmentAgency (“SDA”) made a positive contribution to the Group’s financial results.

3. Going concern

The Group made a loss of R15.9 million for the year ended 30 June 2018 and, as of that date, the Group’s current liabilities exceeded its current assets by R99.6 million (excluding income received in advance which will not crystallise asa cash outflow). The Group continues to pursue its plans of improving this position and is still determined to achieve anet current asset position within the next few years. It is quite important for this position to be achieved because itwould result in the debts being settled more quickly. The Group has therefore set out to achieve significant operatingsurplus during the next few years in order to achieve a net current asset position.

The Group has long-term sponsorship contracts with most of its sponsors and this assures it of future revenue inflows.These sponsorships are expected to continue in view of the long-term nature and the mutual relationships that are longstanding. The Group also continues to exploit a number of revenue opportunities that it identified previously. This is beingcombined with the implementation of its financial recovery plan which is expected to achieve a fair amount of successin the medium to long term.

\We are finalising the negotiations for an extension of our broadcast rights agreement. Efforts are being made to ensurethat the parties, SABC and SAFA, will sign a mutually beneficial agreement soon. The Government is also assisting infacilitating the finalisation of these negotiations. We are also negotiating with a few broadcasters for the sale of our satellite rights. With the continuous advancement of technology, the broadcast market has broadened and now includesthe domestic market, rest of Africa, worldwide and internet rights.

We are also negotiating with a number of potential sponsors for the sale of rights for a number of our properties. Theseproperties include junior national teams, coaching education and leagues. We are making some steady progress in thatregard. In September 2018, we launched a sponsorship for our referees by OUTsurance.

During the run-up to the 2010 FIFA World Cup™, FIFA launched a programme named “Win in Africa with Africa” tosupport the development of the game on the African continent. The South African Government committed USD $10million for the African Diaspora legacy programme, specifically for the Caribbean countries. FIFA agreed to administerthe fund through the FIFA account. As part of its African Renaissance philosophy, the South African Government reachedout to the African Diaspora to incorporate them in the programme for them to benefit from the first FIFA World Cup™on African soil. FIFA transferred the funds, USD $10m, to the Caribbean countries, on behalf of the South African Government. FIFA then deducted these funds from SAFA’s share of the 2010 FIFA World Cup™ ticketing revenue. SAFAis now in negotiations with the South African Government for the reimbursement of this amount to SAFA.

We are in the process of appointing a new agency to manage our entire licensing and merchandising programme. This

2120


Report of the Councilfor the year ended 30 June 2018


Report of the Councilfor the year ended 30 June 2018 (continued)

programme is expected to bring in additional and unencumbered revenue to the Group. This will be achieved throughthe selling of a wide range of our merchandise via in-house merchandising stores, independent fashion houses and department stores.

The FIFA Forward programme is still in place and we will continue to benefit from it as a FIFA Member Association. TheOperational Costs and Project funding has been increased from US $1.25 million per annum to US $1.5 million perannum. These funds go a long way in covering our normal operational costs and some projects.

In July 2016, CAF advised us that due to its improved commercial arrangements, its Member Associations will now receive bigger shares of the CAF TV rights. Member Associations are now guaranteed a share of the TV revenue by participating in any of the CAF competitions. CAF has also introduced the annual CAF Grant and each Member Association receives $100,000.00 with effect from 1 July 2017. The financial benefits of this grant commenced in the2018 financial year (1 July 2017). We have already received 2 grants, that is 1 July 2017 and 1 July 2018.These grantswill continue to be paid by CAF, thus assuring us of future funding.

We continue to have access to various grants which go toward our development programmes. The 2010 FIFA World CupLegacy Trust (“the Trust”) continues to support our development activities. We have successfully applied for regularfunding since 2013 and we expect this funding to continue in the future. This means that the SAFA’s development programmes will continue unhampered. Therefore, management’s efforts can be channelled towards generating fundsfor other programmes and improving the current assets position of the Group.

The National Lotteries Commission also continues to make funds available for some of our activities. We were recentlygranted funding for a Women's Coaching course and we submitted other applications to support our National Teamsthat are preparing for major tournaments. We anticipate to get positive responses to our submissions.

Sport and Recreation South Africa (“SRSA”) has provided us with a grant of R2 million per year during the past 2 years;so this funding is now consistent. These funds are assisting with our Schools’ Football activities, Grassroots programmesand Women's Football development.

SETA / CATHSETA funding: The Association pays towards the Skills Development Levy on a regular basis. It contributesboth on the permanent and non-permanent payroll. Previously we have only received training funds from CATHSETAfor permanent staff training. We have now decided to try accessing funding for non-permanent staff like referees andcoaches courses. We are confident that our funding applications will be considered favourably.

The Government has a number of initiatives that are aimed at encouraging social cohesion and healthy lifestyles andfunding is provided towards this. Football plays a significant role in assisting the Government in its efforts. We will,therefore, work closely with Government so that they can fund our existing football development programmes, especiallyat grassroots level.

The Fun Valley business is a profitable one and these profits will contribute towards the financial recovery of the Association. These profits will be used to improve Fun Valley so that we can gain more patronage and improve the business’ profitability. We are now hosting a number of our events at Fun Valley. These include hosting our NationalTeams, coaching courses, administration workshops, tournaments, etc. This is resulting in significant cost savings for theAssociation, especially accommodation costs. The National Technical Centre upgrades are still in progress. We shouldhave at least 3 soccer pitches and a completed boundary wall during the 2019 financial year. This will result in cost savings of hiring soccer fields and travelling costs as well. With the FIFA Forward Programme, we are assured of afinancial allocation for infrastructure upgrades at the National Technical Centre annually. There is also potential of gettingother funders to support the development of the football mother body’s National Technical Centre. The infrastructure development at the National Technical Centre will boost our income statement and balance sheet.

We have established SAFA Digital which will be responsible for the digitisation of our Members’ data and commercialexploitation of this Members’ database.

Broadly SAFA Digital comprises of 8 sub-projects which are:



• Registration system• Competition system• Amateur football results website• Talent identification• SAFA.net• Digital Content team• Social Media Operations• E-Commerce

The commercial opportunities associated with SAFA Digital are as follows:

• Telco partnership that will benefit both SAFA and its members (Regions)• Advertising served on both the Registration and Competition systems, as well as associated apps• Big data marketing, that is partnering with an agency to direct market to our members• Presenting sponsors for apps, competition website, talent identification• Membership registration fees

Our application for seed capital from the 2010 FIFA World Cup Legacy Trust was approved in November 2018.

The Group continues to vigorously manage its costs by being innovative in the way that it carries out its activities. Fiscaldiscipline is being practised across the full organisation’s spectrum. This is strengthened by, among other tools, operatingwith an approved budget, enforcement of procurement policies and regular financial reporting. We continue to createvalue within the supply chain by working closely with our suppliers.

The Group has also successfully managed to restructure some of its debts by negotiating favourable repayment periods.This was achieved through the healthy partnerships that we have with our service providers.

The Council believes that the Group will be successful in its continuing efforts of growing its revenue base as outlinedabove. It is also satisfied that the Group is able to meet its working capital liabilities through the normal cyclical natureof its receipts and payments. Further, the Council is intensifying its efforts in monitoring the Group’s ongoing workingcapital requirements and minimising expenditure commitments. It is also increasing its focus on maintaining an appropriate level of overheads in line with the Group’s available cash resources.

The Group has a healthy balance sheet which has a significant amount of non-current assets. These assets include property and financial assets within a company that is listed on the Johannesburg Stock Exchange (refer to note 10).

The Association, as the football controlling body in the country responsible for the country's National Teams, is thereforeconsidered to be a national asset. It is due to this status that it works very closely with the Government and enjoys itssupport.

The Council is therefore confident that the Group is a going concern.

4. Property, plant and equipment

Details of changes in property, plant and equipment are shown in note 9 to the financial statements.

The Association received a grant from FIFA for the development of SAFA House during the 2006 financial year. SAFAHouse has been built on land to which the Association was granted a right to erect improvements. This land belongsto the Department of Public Works. There is an understanding that the land on which SAFA house was built, would ultimately be transferred to the Association. At the date of this report, this has not happened and the Association is stillin discussions with the Minister of Sport regarding the transfer of the property to SAFA.

5. Financial asset

Network Healthcare Holdings Limited (“Netcare”) established the Healthy Lifestyle Trust as part of its Broad-Based BlackEconomic Empowerment initiative. The Association was allocated 4 million trust units. This investment has been accounted for in terms of International Accounting Standard 39: “Financial Instruments: Recognition and

2322



5. Financial asset (continued)

Measurement”. Refer to note 10 to the financial statements for further details.

Subsequent to the financial year-end, SAFA relinquished all its rights of being the Healthy Lifestyle Trust’s anchorbeneficiary. SAFA’s remaining trust units were converted to Netcare shares based on Netcare’s closing share price on 31August 2018. SAFA is now the holder of Netcare equity shares only.

6. Group Financial Statements

The Association has consolidated some of its subsidiaries and the reasons for this is set out below.

6.1. Africa Cup of Nations 2013 Local Organising Commitee South Africa NPC

The Africa Cup of Nations 2013 Local Organising Committee South Africa NPC was established to organise and hostthe Orange Africa Cup of Nations 2013 tournament in South Africa in 2013 and the African Nations Championship in2014 (“CHAN”). The Association was granted the rights by the Confederation of African Football (“CAF”) to host thesetournaments and thereafter ceded these rights to the Africa Cup of Nations 2013 Local Organising Committee SouthAfrica NPC (“AFCON”). The Association is the sole member of this entity and has control over AFCON. The governmentwas the major funder. This entity has therefore been consolidated. This entity is currently winding down operations.

6.2. The South African Football Association Development Agency Trust

The Association has a 100% interest in the South African Football Association Development Agency (“the DevelopmentAgency”). This entity was formed to implement and source funding for the Technical Master Plan (“TMP”). The TMP focuses on the development drive of the Association. This entity has been consolidated in the Group Financial Statements. The Development Agency ceased its operations on 31 December 2017 and is now is in the process ofclosing down. Its activities have been integrated within SAFA.

The trustees agreed that the Trust be dissolved and agreed that upon dissolution, that the trust will transfer the rightsand obligations of the leasehold asset to the founder, South African Football Association, as settlement of the loan.

6.3. SA Infrastructure Development Foundation Trust

The Association has a 100% (one hundred per cent) shareholding in SA Infrastructure Development Foundation (“theFoundation”). The Foundation was established to rollout the infrastructure, mainly artificial turfs, for the benefit of football. The Foundation did not operate in the current year and is in the process of being deregistered.

7. Tax status

On the 3rd June 2010, the Association was approved by the South African Revenue Services (“SARS”) as a public benefitorganisation (“PBO”) in terms of Section 30(3) of the Income Tax Act (“the Act”). This means that annual receipts andaccruals will therefore be subject to section 10(1)(cN) of the Act and receipts and accruals from trading or business activities which fall outside the parameters of section 10(1)(cN) will be subject to tax. This approval means that morefunds will now be available for the development of football which is in line with the key objectives of the Association.

Business address: SAFA House Postal address: PO Box 91076 Nasrec Road JohannesburgNasrec Ext 3 2000Johannesburg 2000

8. Subsequent events

No significant events have occurred after 30 June 2018 that will have an impact on the reported financial results.

9. Auditors

The Association’s auditors are PricewaterhouseCoopers Inc. and were appointed in terms of article 75 of the Association’sStatutes on 28 April 2018.





26 to 52




Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2018


Statement of Financial Position as at 30 June 2018

Group AssociationFigures in Rand Note(s) 2018 2017 2018 2017

Revenue 3 304,113,297 357,674,009 290,716,837 338,483,637Operating expenses (323,705,955) (331,384,234) (312,647,501) (310,978,257)

Operating (loss) profit 4 (19,592,658) 26,289,775 (21,930,664) 27,505,380

Finance income 5 958,711 1,850,376 929,083 1,789,118Finance costs 6 (1,150,648) (1,680,261) (878,202) (1,596,326)Other Income 2,159,859 1,170,172 2,159,859 1,170,172Other non-operating profit( losses) 7 1,761,312 (5,730,572) 1,761,312 (5,730,572)

(Loss) profit before taxation (15,863,424) 21,899,490 (17,958,612) 23,137,772Taxation 8 - - - -

(Loss) profit for the year (15,863,424) 21,899,490 (17,958,612) 23,137,772Other comprehensive income - - - -

Total comprehensive (loss) income (15,863,424) 21,899,490 (17,958,612) 23,137,772for the year


Assets

Non-Current AssetsProperty, plant and equipment 9 106,611,983 105,891,061 99,613,157 97,838,415Financial assets 10 21,034,552 20,397,797 21,034,552 20,397,797Intangible assets 11 5,000,000 5,000,000 5,000,000 5,000,000Investments in subsidiaries 12 - - - -

132,646,535 131,288,858 125,647,709 123,236,212

Current AssetsTrade and other receivables 13 49,985,153 49,091,439 54,283,636 53,084,526Cash and cash equivalents 14 7,505,930 8,298,499 7,015,577 6,568,841

57,491,083 57,389,938 61,299,213 59,653,367

Total Assets 190,137,618 188,678,796 186,946,922 182,889,579

Equity and Liabilities

EquityRetained income 12,344,538 28,207,962 11,617,492 29,576,104

Liabilities

Non-Current LiabilitiesInterest-bearing loans 15 - 726,641 - 726,641

Current LiabilitiesTrade and other payables 16 153,354,280 126,486,053 150,890,630 120,027,382Interest-bearing loans 15 3,741,845 7,524,660 3,741,845 7,524,660Income received in advance 17 20,696,955 25,733,480 20,696,955 25,034,792

177,793,080 159,744,193 175,329,430 152,586,834

Total Liabilities 177,793,080 160,470,834 175,329,430 153,313,475

Total Equity and Liabilities 190,137,618 188,678,796 186,946,922 182,889,579




Statement of Changes in Equityfor the year ended 30 June 2018


Statement of Cash Flowsfor the year ended 30 June 2018

Figures in Rand Retained income Total equity

GroupBalance at 01 July 2016 6,308,472 6,308,472

Profit for the year 21,899,490 21,899,490Other comprehensive income - -

Total comprehensive income for the year 21,899,490 21,899,490

Balance at 01 July 2017 28,207,962 28,207,962

Loss for the year (15,863,424) (15,863,424)Other comprehensive income - -

Total comprehensive Loss for the year (15,863,424) (15,863,424)

Balance at 30 June 2018 12,344,538 12,344,538

AssociationBalance at 01 July 2016 6,438,332 6,438,332

Profit for the year 23,137,772 23,137,772Other comprehensive income - -

Total comprehensive income for the year 23,137,772 23,137,772

Balance at 01 July 2017 29,576,104 29,576,104

Loss for the year (17,958,612) (17,958,612)Other comprehensive income - -

Total comprehensive Loss for the year (17,958,612) (17,958,612)

Balance at 30 June 2018 11,617,492 11,617,492

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Cash flows from operating activities

Cash generated from / (used in) operations 18 12,197,505 3,702,982 13, 197988 (3,710,086)

Finance income 958,711 1,850,376 929,083 1,789,118Finance costs (1,150,648) (1,680,261) (878,202) (1,596,326)

Net cash generated from / 12,005,568 3,873,097 13,248,869 (3,517,294)utilised in operating activities

Cash flows from investing activities

Purchase of property, plant and equipment 9 (9,413,238) (14,192,823) (9,417,234) (5,444,291)

Disposal of Trust units 1,050,145 - 1,050,145 -Proceeds from disposal of property, plant and equipment 74,412 338,495 74,412 338,495

Net cash utilised in (8,288,681) (13,854,328) (8,292,677) (5,105,796)investing activities

Cash flows from financing activities

Repayment of interest-bearing loans (4,509,456) (5,157,902) (4,509,456) (5,157,902)

Total cash movement for the year (792,569) (15,139,133) 446,736 (13,780,992)Cash at the beginning of the year 8,298,499 23,437,632 6,568,841 20,349,833

Total cash at end of the year 14 7,505,930 8,298,499 7,015,577 6,568,841




Accounting Policies for the year ended 30 June 2018

Reporting entity

The South African Football Association (“Association”) is domiciled in South Africa. The Association and Group financialstatements for the year ended 30 June 2018 comprise the Association and its subsidiaries (together referred to as the“Group”). The Association is the governing body for football in South Africa. The main aim and objectives are to promote, advance, administer, co-ordinate and generally encourage the game of football in South Africa.

The financial statements were authorised for issue by the Council on 14 November 2018.

1. Significant accounting policies

The principal accounting policies applied in the preparation of these consolidated and separate group financial statements and association financial statements are set out below.

1.1 Basis of preparation

These Group financial statements and financial statements are presented in South African Rands which is the functionalcurrency of the Group and the Association and the presentation currency for the financial statements.

The Group financial statements and financial statements have been prepared in accordance with International FinancialReporting Standards (“IFRS”) on the historical cost basis, except for the revaluation of certain financial instrumentswhich are stated at fair value.

1.2 Summary of signficant policies

The principal accounting policies adopted in the preparation of these Group financial statements and Association financial statements are set out below and are consistent in all material respects for the Group with those applied in theprevious year.

1.3 Property, plant and equipment

Property, plant and equipment that have been acquired is stated at historical cost less accumulated depreciation andaccumulated impairment losses. Property, plant and equipment that is received as donations are initially recorded at thefair value of the assets received.

Depreciation is charged so as to write off the cost of assets over their estimated useful lives to their residual values, usingthe straight line method.

The useful lives of items of property, plant and equipment have been assessed as follows:

Item Depreciation method Average useful lifeBuildings Straight line 5%Leasehold property - SAFA House Straight line 5%Leasehold property - Alex Hub Straight line 10%Furniture and fittings Straight line 16.7%Motor vehicles Straight line 20%Office equipment Straight line 20%Computer equipment and software Straight line 33.3%General equipment Straight line 20%Buses Straight line 20%

Land and buildings are stated at cost less accumulated depreciation and impairment losses. Costs include expenditurethat is directly attributable to the cost of the asset.

Depreciation is charged so as to write-off the cost of property, plant and equipment over their expected useful life using

1.3 Property, plant and equipment (continued)

the straight-line basis. Land is not depreciated. The expected useful lives, residual values and depreciation methods arereviewed at each reporting date.

Subsequent expenditure is recognised at cost in the carrying amount of property, plant and equipment if it is probablethat future economic benefits embodied in the item will flow to the Group and the cost of the item can be measuredreliably. All other costs are recognised in profit or loss as an expense.

Leasehold improvements are capitalised and written-off in accordance with the expected lease period. The expected useful lives, residual values and depreciation method are reviewed at each reporting date. The effect of any changes inestimate is accounted for in the year the change occurs.

The gain or loss arising on disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.

1.4 Intangible assets

Trademarks

Trademarks acquired by the Group, which have an indefinite useful life, are measured at the cost less accumulated impairment losses. These trademarks are not amortised but are tested annually for impairment.

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specificasset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands isrecognised in profit or loss as incurred.

1.5 Basis of consolidation

Investment in subsidiaries

Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to,variable returns from its involvement with the entity and has the ability to affect these returns through its power overthe entity. The financial statements of subsidiaries are included in the consolidated financial statements from the datethat control commences until the date that control ceases.

The Group financial statements incorporate the assets, liabilities and results of the operations of the Association and itssubsidiaries. The results of subsidiaries acquired and disposed of during a financial year are included from the effectivedates of acquisition and to the effective dates of disposal.

Transactions eliminated on consolidation

Intra group balances and any unrealised gains and losses or income and expenses arising from intra group transactions,are eliminated in preparing the consolidated financial statements.

1.6 Impairment of assets

At each reporting date, the Group reviews the carrying amounts of its tangibles and trademarks to determine whetherthere is any indication that those assets may be impaired. If any such indication exists, the recoverable amount of theasset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount for an individual asset, the recoverable amount is determined for the cash-generatingunit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated

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Accounting Policies for the year ended 30 June 2018 (continued)



1.6 Impairment of assets (continued)

future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flowshave not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. Impairment losses are recognised as an expense immediately in profit or loss.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increasedto the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carryingamount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit)in prior years. A reversal of an impairment loss is recognised as income immediately in profit or loss.

1.7 Income received in advance

Funds received from sponsors and other contract suppliers, which do not meet the recognition of revenue associatedwith contracts, are deferred and recorded as “income received in advance” and amortised to the income statement asthe recognition criteria are met or over the terms on the contracts.

1.8 Financial instruments

Classification

The group classifies financial assets and financial liabilities into the following categories:

• Loans and receivables and;• Financial liabilities measured at amortised cost

Classification depends on the purpose for which the financial instruments were obtained / incurred and takes place atinitial recognition. Classification is re-assessed on an annual basis, except for derivatives and financial assets designatedas at fair value through profit or loss, which shall not be classified out of the fair value through profit or loss category.

Financial assets at fair value through profit or loss

The financial asset is classified as at the fair value through profit or loss as designated as such on initial recognition. Financial assets are designated as at fair value through profit or loss if the Group manages such investments and makespurchase and sale decisions based on their fair value in accordance with the Group’s investment strategy. Financial assetsat fair value through profit and loss are measured at fair value and changes therein, attributable transaction costs, dividend income and gains and losses on sale of shares are recognised in profit or loss.

Trade and other receivables

Trade and other receivables are initially measured at fair value and subsequently at amortised cost as reduced by appropriate allowances for estimated irrecoverable amounts.

Trade and other payables

Trade and other payables are initially measured at fair value and at subsequently amortised cost.

Financial liabilities and equity

Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractualarrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument isany contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.

1.8 Financial instruments (continued)

Borrowings

Interest-bearing loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges,including premiums payable on settlement or redemption, are accounted for on an accrual basis and are added to thecarrying amount of the instrument to the extent that they are not settled in the year in which they arise.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, deposits held on call with banks and bank overdrafts. Bank overdraftsthat are repayable on demand and form part of an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.

1.9 Foreign exchange

Transactions in currencies other than the Group’s functional currency (Rands) are initially recorded at the rates of exchange ruling on the date of the transactions.

Exchange rate differences arising from the settlement of monetary items or on reporting the Group’s monetary itemsat rates different from those at which they are initially recorded are recognised as profit or loss in the period in whichthey arise.

1.10 Revenue

Revenue is measured at the fair value of the consideration received or receivable.

Revenue comprises sponsorship revenue, sale of broadcasting rights, income from the Confederation of African Football(“CAF”) and Fédération Internationale de Football Association (FIFA), income for Host Cities, royalties, gate revenuefrom competitions, club affiliation fees, advertising fees, government and other grants and the cash equivalent value ofnon-cash items supplied to the Group.

Revenue from sponsors and others, which is receivable in terms of contracts, is recognised on a straight-line basis overthe term of such contracts.

Revenue received from affiliation, match and other fees is recognised in profit or loss when the Group is entitled to suchrevenue.

Revenue received from the Confederation of African Football (“CAF”) in respect of the national teams qualification interms of CAF tournament is recognised in profit or loss once the event has occurred and the group is entitled to suchrevenue.

Grants that compensate the Group for expenses incurred are recognised in the profit or loss as other income on a systematic basis in the period which the expenses are recognised.

Revenue in respect of ticket sales is accounted for when the risks and rewards of ownership of the tickets is transferredto the buyer and it is probable that economic benefits will flow to the Group.

Government grants are recognised in profit or loss on a systematic basis in the period in which the expense is recognisedand there is reasonable assurance that the entity will comply with the conditions attached and the grant will be received.

The Group recognises a grant related to an asset on a business acquisition in profit or loss when the Group has compliedwith the conditions attached to the grant and the grant becomes receivable.

Revenue from broadcasting rights are recognised when the relevant event is broadcast to the public and there is reasonable assurance that the Group will comply with the conditions attached to the broadcasting rights.

3332







1.10 Revenue (continued)

Revenue from CAF for share of sponsorship income is recognised in profit or loss when the Group is entitled to suchrevenue and there is reasonable assurance that the entity complies with the conditions attached to the share of income.

Revenue from Host Cities for sponsorship of events is recognised in the period in which the event takes place.

Recoveries from Host Cities are offset against the related expenses that have been incurred.

Revenue from the National Technical Centre comprises accommodation facilities, rental and daily visitors’ entrance feesand is recognised when the services are provided.

No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due.

1.11 Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards ofownership to the lessee. All other leases are classified as operating leases.

Assets held under finance leases are recognised as assets of the Group at the lower fair value and the present value ofminimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. Finance costs, which represent the differencebetween the total minimum lease payments and the present value of the minimum lease payments, are recognised inprofit or loss over the term of the relevant lease so as to produce a constant periodic rate of interest on the remainingbalance of the obligations for each reporting period.

Operating lease payments are recognised as an expense on a straight line basis over the lease term.

1.12 Finance income and expenses

Finance income comprises interest income on cash and cash equivalents. Interest income is recognised, in profit or loss,using the effective interest rate method.

Finance costs comprise interest expenses from financial liabilities. Interest expenses are recognised on a time proportionbasis, taking account of the principal outstanding and the effective rate over the period to maturity, when it is probablethat such expense will accrue to the Group.

1.13 Tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in theprofit or loss because it excludes items of income or expense that are taxable or deductible in other years and it furtherexcludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates thathave been enacted or substantively enacted by the reporting date.

Current tax is recognised as an expense or income in profit or loss, except when it relates to items recognised directlyto equity or other comprehensive income, in which case the tax is also recognised directly in equity, or other comprehensive income or where they are from the initial accounting for a business combination.

1.14 Employee benefits

Current employee benefits

The cost of all short term employee benefits is recognised during the period in which the employee renders the relatedservice.

1.14 Employee benefits (continued)

The accruals for employee entitlements to wages, salaries and annual leave represent the amount which the Group hasa present obligation to pay as a result of employees’ services provided to the statement of financial position date. Theaccruals have been calculated at undiscounted amounts based on current wage and salary rates.

Retirement benefits

Contributions to retirement contribution funds are recognised in profit or loss in the year when the employees have rendered service entitling them to the contributions.

1.15 Significant judgements and sources of estimation uncertainty

The preparation of the Group financial statements and financial statements in conformity with IFRS requires managementto make judgements, estimates and assumptions that affect the application of accounting policies and the reportedamounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in theperiod in which the estimates are revised and in any future periods affected.

Information about critical judgements in applying accounting policies that have the most significant effect on theamounts recognised in the notes.

Impairment of assets

Property, plant and equipment are considered for impairment if there is a reason to believe that impairment may be necessary. Factors taken into consideration in reaching such a decision include the economic viability of the asset itselfand specific usage requirements.

Assets lives and residual values

Property, plant and equipment are depreciated over its useful life taking into account residual values, where appropriate.The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors.In reassessing asset lives, factors such as technological innovation, product life cycles and maintenance programmes aretaken into account. Residual value assessments consider issues such as future market conditions, the remaining life ofthe asset and projected disposal values.

Trademarks

The Association’s management performs annual assessments as to possible impairments of the Bafana Bafana trademarktaking into account its estimated fair value.

Valuation of financial asset

The Group’s interest in the financial asset is a form of trust units which is accounted for as options and equity shares.

The valuation of options has been performed by independent valuators based on the Monte Carlo method of simulation.The simulation method is dependent on a number of variables including share price volatility, interest rates and dividends. The equity shares are valued at the market value at reporting date.

Contingent liabilities

Management applies its judgement to the fact patterns and advice it receives from its attorneys, advocates and otheradvisors in assessing if an obligation is probable, more likely than not, or remote. This judgement application is used todetermine if the obligation is recognised as a liability or disclosed as a contingent liability.

3534







2. New Standards and Interpretations

2.1 Standards and interpretations effective and adopted in the current year

In the current year, the Group has adopted the following standards and interpretations that are effective for the currentfinancial year and that are relevant to its operations:

Standard/ Interpretation: Effective date: Expected impact:Years beginning on or after

• Amendments to IAS 7: Disclosure initiative 01 January 2017 The impact of the standard is not material.

• Amendments to IAS 12: Recognition of 01 January 2017 The impact of theDeferred Tax Assets for Unrealised Losses amendments is not

material.

2.2 Standards and interpretations not yet effective

The Group has chosen not to early adopt the following standards and interpretations, which have been published andare mandatory for the group’s accounting periods beginning on or after 01 July 2018 or later periods:

Standard/ Interpretation: Effective date: Expected impact:Years beginning on or after

• Insurance Contracts 01 January 2021 Unlikely there will be amaterial impact

• IFRS 16 Leases 01 January 2019 Unlikely there will be amaterial impact

• IFRS 9 Financial Instruments 01 January 2018 Unlikely there will be amaterial impact

• IFRS 15 Revenue from Contracts 01 January 2018 Unlikely there will be awith Customers material impact

• Amendments to IFRS 15: Clarifications 01 January 2018 Unlikely there will be ato IFRS 15 Revenue from Contracts material impactwith Customers

The aggregate impact of the initial application of the statements and interpretations on the Group financialstatements and Association financial statements is expected to be as follows:

Group AssociationFigures in Rand 2018 2017 2018 2017

3. Revenue

Ticketing revenue 1,203,376 1,964,589 1,203,376 1,964,589Television broadcasting rights 92,859,400 111,474,222 92,859,400 111,474,222Host cities’ income 5,040,053 10,228,070 5,040,053 10,228,070Sponsorship income 148,376,935 167,535,726 134,980,475 148,345,354Rental income 226,560 653,068 226,560 653,0682010 FIFA World Cup Legacy Trust – grants 49,827,163 59,200,982 49,827,163 59,200,982National Technical Centre – day visitors and 6,579,810 6,617,352 6,579,810 6,617,352use of facilities

304,113,297 357,674,009 290,716,837 338,483,637

4. Operating (loss) / profit

Operating (loss) profit for the year is stated after charging (crediting) the following, amongst others:

Depreciation

Buildings 2,980,611 2,748,140 2,980,611 2,748,140SAFA House 3,045,134 3,035,114 3,045,134 3,035,114Leasehold property - Alex Hub 1,049,824 699,882 - -Furniture and fittings 484,815 453,810 484,815 453,810Motor vehicles 402,809 472,057 402,809 472,057Office equipment 47,426 8,365 47,426 8,365Computer equipment 472,456 313,393 472,456 292,862General equipment 209,241 162,813 209,241 162,813Buses - 268,830 - 268,830

8,692,316 8,162,404 7,642,492 7,441,991

The value of the buses is an approximation of the residual values and therefore no further depreciation is provided.

Other

Accounting fee 13,583,341 13,781,693 13,583,341 12,970,578Auditors remuneration 1,121,778 1,268,855 1,121,778 1,228,855Employee costs 41,764,882 43,187,889 37,411,089 39,247,319Legal and consulting fees 15,346,139 17,659,207 15,346,139 17,659,207Key management personnel remuneration 10,439,029 9,670,708 10,439,029 9,670,708Council- Honoraria 4,469,680 4,762,497 4,469,680 4,762,497- Allowanaces 3,914,555 1,170,805 3,914,555 1,170,805

5. Finance income

Bank and other cash 554,491 1,611,604 524,863 1,550,346Foreign exchange profit 404,220 238,772 404,220 238,772

958,711 1,850,376 929,083 1,789,118

3736


Notes to the Group Financial Statements and Association Financial Statementsfor the year ended 30 June 2018


Notes to the Group Financial Statements and Association Financial Statementsfor the year ended 30 June 2018 (continued)




6. Finance costs

Interest paid - bank and finance charges 414,353 363,869 414,353 363,869Interest paid - suppliers 586,377 935,351 313,931 851,416Interest paid - 2010 FIFA World Cup Legacy Trust 149,918 381,041 149,918 381,041

1,150,648 1,680,261 878,202 1,596,326

7. Other non-operating gains (losses)

Fair value gains (losses)

Increase/(decrease) in fair value of financial asset 1,686,900 (5,546,333) 1,686,900 (5,546,333)

Profit/(loss) on sale of non-current assets 74,412 (184,239) 74,412 (184,239)

1,761,312 (5,730,572) 1,761,312 (5,730,572)

8. Taxation

On 3 June 2010, the Association was approved by the South African Revenue Services (“SARS”) as a public benefit organisation (“PBO”) in terms of Section 30(3) of the Income Tax Act (“the Act”). This means that annual receipts andaccruals in relation to the principle business of development of amateur football will therefore be subject to section10(1)(cN) of the Act and receipts and accruals, from trading or business activities which fall outside the parameters ofsection 10(1)(cN) will be subject to tax. However, Section 11 (a) and 11 (E) provides for a deduction in respect of non-capital expenditure whether business or development related.

The Africa Cup of Nations 2013 Local Organising Committee South Africa NPC, the South African Football AssociationInfrastructure Development Foundation and the South African Football Association Development Agency Trust havealso been approved by SARS as a public benefit organisation (“PBO”) in terms of Section 30 of the Income Tax Act andthe receipts and accruals will therefore not be subject to section 10(1)(cN) of the Act.

No provision has been made for 2018 taxation as the Association and its subsidiaries are in a computed loss position.A deferred tax asset in respect of computed tax losses has not been recognised as it is not probable that future taxableprofit will be available against which the Group could utilise this asset.

9. Property, plant and equipment

Group 2018 2017

Cost Accumulated Carrying Cost Accumulated Carryingdepreciation value depreciation value

Land and buildings 73,933,829 (8,431,132) 65,502,697 68,053,093 (5,450,520) 62,602,573Leasehold property - Alex Hub 8,748,532 (1,749,706) 6,998,826 8,748,532 (699,882) 8,048,650

Leasehold property - SAFA House 60,902,698 (32,997,012) 27,905,686 60,902,698 (29,951,878) 30,950,820

Furniture and fittings 5,501,934 (3,368,779) 2,133,155 4,615,015 (2,883,965) 1,731,050Motor vehicles 17,644,589 (17,225,451) 419,138 19,203,507 (18,381,560) 821,947Office equipment 942,789 (534,097) 408,692 495,700 (486,671) 9,029Computer equipment 11,105,249 (9,097,489) 2,007,760 9,409,792 (8,906,069) 503,723General equipment 2,794,808 (2,030,465) 764,343 2,572,806 (1,821,223) 751,583Buses 20,613,880 (20,142,194) 471,686 29,738,992 (29,267,306) 471,686

Total 202,188,308 (95,576,325) 106,611,983 203,740,135 (97,849,074) 105,891,061

Association 2018 2017

Cost Accumulated Carrying Cost Accumulated Carryingdepreciation value depreciation value

Land and buildings 73,933,829 (8,431,132) 65,502,697 68,053,093 (5,450,520) 62,602,573Leasehold property- SAFA House 60,902,698 (32,997,012) 27,905,686 60,902,698 (29,951,878) 30,950,820

Furniture and fittings 5,501,934 (3,368,779) 2,133,155 4,615,015 (2,883,965) 1,731,050Motor vehicles 17,644,589 (17,225,451) 419,138 19,203,507 (18,381,560) 821,947Office equipment 942,789 (534,097) 408,692 495,700 (486,671) 9,029Computer equipment 11,043,649 (9,035,889) 2,007,760 9,348,192 (8,848,465) 499,727General equipment 2,794,808 (2,030,465) 764,343 2,572,806 (1,821,223) 751,583Buses 20,613,880 (20,142,194) 471,686 29,738,992 (29,267,306) 471,686

Total 193,378,176 (93,765,019) 99,613,157 194,930,003 (97,091,588) 97,838,415

Reconciliation of property, plant and equipment - Group - 2018

Opening Additions Depreciation Totalbalance

Land and buildings 62,602,573 5,880,735 (2,980,611) 65,502,697Leasehold property - Alex Hub 8,048,650 - (1,049,824) 6,998,826Leasehold property - SAFA House 30,950,820 - (3,045,134) 27,905,686Furniture and fittings 1,731,050 886,920 (484,815) 2,133,155Motor vehicles 821,947 - (402,809) 419,138Office equipment 9,029 447,089 (47,426) 408,692Computer equipment 503,723 1,976,493 (472,456) 2,007,760General equipment 751,583 222,001 (209,241) 764,343Buses 471,686 - - 471,686

105,891,061 9,413,238 (8,692,316) 106,611,983

3938








10. Financial assets

At fair value through profit or loss

Equity shares 15,289,521 14,243,279 15,289,521 14,243,279Trust units 5,745,031 6,154,518 5,745,031 6,154,518

21,034,552 20,397,797 21,034,552 20,397,797

Network Healthcare Holdings Limited (“Netcare”) established the Healthy Lifestyle Trust as part of its Broad-BasedBlack Economic Empowerment initiative. SAFA is a beneficiary of the Trust and was allocated 4 million trust unitslinked to a corresponding number of Netcare shares. During the current financial year, the Association owned 553 567equity securities and is entitled to 372 695 trust units. The equity shares were valued at reporting date at the marketvalue of the shares and the trust units were valued by independent valuators based on the Monte Carlo simulationmethod. The vesting of these trust units are subject to certain qualifying criteria and vesting conditions and the Association and Trustees are satisfied that the trust units will vest on due dates. In the current year, SAFA disposed of77 305 trust units for a cash consideration of R 1,050,145.

Subsequent to the financial year-end, SAFA relinquished all its rights of being the Healthy Lifestyle Trust’s anchorbeneficiary. SAFA’s remaining trust units were converted to Netcare shares based on Netcare’s closing share price on31 August 2018. SAFA is now the holder of Netcare equity shares only.

11. Intangible assets

Group 2018 2017

Cost Accumulated Carrying Cost Accumulated Carrying amortisation value amortisation value

Bafana Bafana trademark 5,000,000 - 5,000,000 5,000,000 - 5,000,000

Association 2018 2017

Cost Accumulated Carrying Cost Accumulated Carrying amortisation value amortisation value

Bafana Bafana trademark 5,000,000 - 5,000,000 5,000,000 - 5,000,000

The trademark was acquired in 2011 and the Association has sole rights and exclusive usage. The trademark is considered to have an indefinite useful life as it is associated with the senior men’s national football team. The nameis widely known and popular. Football is one of the most popular sports in South Africa and internationally and therefore the team will continue to receive the support of the majority of people, including the Government for manyyears. Management considers the fair value of the trademark to be in excess of its carrying value. Royalties in excessof R4.2 million are received annually.

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9. Property, plant and equipment (continued)

Reconciliation of property, plant and equipment - Group - 2017

Opening Additions Disposals Depreciation Totalbalance

Land and buildings 62,096,645 3,254,068 - (2,748,140) 62,602,573Leasehold property - Alex Hub - 8,748,532 - (699,882) 8,048,650Leasehold property - SAFA House 33,698,807 287,127 - (3,035,114) 30,950,820Furniture and fittings 1,642,778 542,082 - (453,810) 1,731,050Motor vehicles 1,008,713 442,894 (157,603) (472,057) 821,947Office equipment 17,394 - - (8,365) 9,029Computer equipment 528,966 288,150 - (313,393) 503,723General equipment 284,426 629,970 - (162,813) 751,583Buses 1,105,647 - (365,131) (268,830) 471,686

100,383,376 14,192,823 (522,734) (8,162,404) 105,891,061

Reconciliation of property, plant and equipment - Association - 2018

Opening Additions Depreciation Totalbalance

Land and buildings 62,602,573 5,880,735 (2,980,611) 65,502,697Leasehold property - SAFA House 30,950,820 - (3,045,134) 27,905,686Furniture and fittings 1,731,050 886,920 (484,815) 2,133,155Motor vehicles 821,947 - (402,809) 419,138Office equipment 9,029 447,089 (47,426) 408,692Computer equipment 499,727 1,980,489 (472,456) 2,007,760General equipment 751,583 222,001 (209,241) 764,343Buses 471,686 - - 471,686

97,838,415 9,417,234 (7,642,492) 99,613,157

Reconciliation of property, plant and equipment - Association - 2017

Opening Additions Disposals Depreciation Totalbalance

Land and buildingd 62,096,645 3,254,068 - (2,748,140) 62,602,573Leasehold property - SAFA House 33,698,807 287,127 - (3,035,114) 30,950,820Furniture and fittings 1,642,778 542,082 - (453,810) 1,731,050Motor vehicles 1,008,713 442,894 (157,603) (472,057) 821,947Office equipment 17,394 - - (8,365) 9,029Computer equipment 504,439 288,150 - (292,862) 499,727General equipment 284,426 629,970 - (162,813) 751,583Buses 1,105,647 - (365,131) (268,830) 471,686

100,358,849 5,444,291 (522,734) (7,441,991) 97,838,415

SAFA House has been erected on land that is not owned by the Association and therefore disclosed as leasehold property.Refer to the Council Report regarding title to SAFA House. Land and buildings relates to the National Technical Centre (FunValley) property situated at portion 45 at Olifantsvlei 316, Johannesburg, Gauteng.




12. Investments in subsidiaries

The following table lists the entities which are controlled by the group, either directly or indirectly through subsidiaries.

At cost less impairment

Name of subsidiary Proportion of Carrying Carryingownership amount 2018 amount 2017

South African Football Association Infrastructure Development Foundation * 100.00 % - -

Africa Cup of Nations 2013 Local Organising Committee South Africa NPC ** 100.00 % - -

The South African Football Association Development Agency*** 100.00 % - -

- -* To be deregistered.** Dormant.*** To be absorbed within SAFA over the next twelve months.

13. Trade and other receivables

Sponsorships and related income 44,612,456 36,014,183 43,255,791 34,370,687Value added taxation 4,661,923 1,600,965 4,661,923 1,600,965SARS receivable - 1,236,130 - 1,236,130The South African Football Association Development Agency Trust - - 5,655,148 5,636,583

Other receivables 710,774 10,240,161 710,774 10,240,161

49,985,153 49,091,439 54,283,636 53,084,526

Trade and other receivables are shown net of a provision for doubtful debts of R5 200 621 (2017: R6 614 042) for theGroup and R4 302 021 (2017: R5 715 442) for the Association.

The Council considers that the carrying amount of trade and other receivables to approximate their fair values.

The average credit period on receivables is 30 days. No interest is charged on trade receivables from the date of invoice.Generally, trade receivables more than 120 days old are provided for with reference to past default experience.

There are no receivables which are past due at the reporting date for which the Group has not provided. Customerswith significant outstanding balances have subsequently paid by reporting date. There has not been significant changein credit quality and amounts are still considered recoverable. The Group does not hold any collateral over these balances.

Trade and other receivables impaired

The ageing of trade and other receivables is as follows:

Not past due 10,874,232 31,826,779 10,874,232 32,866,223Past due 30-90 days 28,234,277 3,651,058 26,877,612 1,263,778120 + days 5,503,947 536,346 5,503,947 240,685

44,612,456 36,014,183 43,255,791 34,370,686


13. Trade and other receivables (continued)

Movement in the provision for impairment

Opening balance 6,614,042 6,094,663 5,715,442 3,970,805Net movement in provision for impairment (1,413,421) 519,379 (1,413,421) 1,744,637

5,200,621 6,614,042 4,302,021 5,715,442

The Council believes that there is no further impairment required of receivables.

14. Cash and cash equivalents

Bank balances 7,505,930 8,298,499 7,015,577 6,568,841

15. Interest-bearing loans

Instalment sale - Mercedes Benz Financial Services 741,845 2,251,301 741,845 2,251,301

less: current portion included under current liabilities (741,845) (1,524,660) (741,845) (1,524,660)

- 726,641 - 726,641

The 2010 FIFA World Cup Legacy Trust 3,000,000 6,000,000 3,000,000 6,000,000Less: current portion (3,000,000) (6,000,000) (3,000,000) (6,000,000)

- - - -

Non-current liabilities - 726,641 - 726,641Current liabilities 3,741,845 7,524,660 3,741,845 7,524,660

3,741,845 8,251,301 3,741,845 8,251,301

The instalment sale Mercedes Benz Financial Services liability is secured over motor vehicles with a carrying value of R419 138 (2017: R821 947). The instalment is R141 068 per month. Interest is payable at an average of 10.52% per annum.

The 2010 FIFA World Cup Legacy Trust loan is unsecured bearing interest at 6% per annum.

A revised payment plan was put in place on 7 November 2017, whereby R3 million was payable on 30 November 2017,R2 million on 28 February 2018 and the balance of R1 million was due 30 April 2018.

R3 million was repaid during the year.

Minimum payments2018 Within 1 year 2-5 years 5 years and over TotalTotal loans 3,741,845 - - 3,741,845

Minimum payments2017Total loans 7,524,660 726,641 - 8,251,301

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19. Risk management (continued)

Credit risk

Credit risk is the risk of financial loss to the Group if a sponsor, donor or counterparty to a financial instrument fails tomeet its contractual obligations, and arises principally from the Group’s receivables.

Trade and other receivables

The Group on an ongoing basis seeks sponsors based on their public profile. Final agreements are entered into whichset out the deliverables and conditions of the sponsorship.

Funding is obtained from the 2010 FIFA World Cup Legacy Trust, the Confederation of African Football, FIFA and othersponsorships. Formal agreements are entered into which set out the terms and conditions of the funding.

The majority of the Group’s sponsors and donors have been transacting with the Group since inception and there havebeen no major losses on trade receivables.

The Group establishes an allowance for impairment for possible losses in respect of trade and other receivables.

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial and other obligations as they fall due. TheGroup’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meetits liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or riskingdamage to the Association' s reputation.

In the case of cash flow difficulties, the Group’s creditors are notified of the situation and remedial action put in place.

The Group however ensures that it has sufficient current assets which will realise in future to meet financial obligations.This excludes the potential impact of extreme circumstances that cannot reasonably be predicted.

Group

At 30 June 2018 Carrying Contractual 12 months or 1 to 5 yearsamount cashflows less

• Trade and other payables 149,904,358 149,904,358 149,904,358 -• Interest bearing loans 3,741,845 3,741,845 3,741,845 -


• Trade and other payables 124,681,557 124,681,557 124,681,557 -• Interest bearing loans 8,251,301 8,251,301 7,524,660 726,641

Association


• Trade and other payables 147,510,849 147,510,849 147,510,849 -• Interest bearing loans 3,741,845 3,741,845 3,741,845 -


• Trade and other payables 119,124,270 119,124,270 119,124,270 -• Interest bearing loans 8,251,301 8,251,301 7,524,660 726,641

4544






16. Trade and other payables

Trade payables 138,172,592 111,034,248 135,854,352 106,154,662VAT 70,141 630,287 - -Sundry payables 11,731,766 13,647,309 11,656,497 12,969,608Salary related payables 3,379,781 1,174,209 3,379,781 903,112

153,354,280 126,486,053 150,890,630 120,027,382

17. Income received in advance

FIFA 1,011,215 - 1,011,215 -PSL 833,333 833,331 833,333 833,331The 2010 FIFA World Cup Legacy Trust 15,202,408 24,201,461 15,202,408 24,201,461Motsepe Foundation 3,650,000 - 3,650,000 -Total Sports Core Funding - 398,688 - -Sishen Iron Ore - 75,000 - -The South Deep Education/Community Trust - 225,000 - -

20,696,956 25,733,480 20,696,956 25,034,792

18. Cash generated from/(used in) operations

(Loss) profit before taxation (15,863,424) 21,899,490 (17,958,612) 23,137,772Adjustments for:Depreciation and amortisation 8,692,316 8,162,404 7,642,492 7,441,991(Gains) losses on disposals of property, plant and equipment (74,412) 184,239 (74,412) 184,239

Finance income (958,711) (1,850,376) (929,083) (1,789,118)Finance costs 1,150,648 1,680,261 878,202 1,596,326(Increase) decrease in fair value of derivative financial asset (1,686,900) 5,546,333 (1,686,900) 5,546,333

Changes in working capital:Trade and other receivables (893,714) 1,490,660 (1,199,110) (12,934,970)Trade and other payables 26,868,227 13,292,890 30,863,248 19,642,768Income received in advance (5,036,525) (46,702,919) (4,337,837) (46,535,427)

12,197,505 3,702,982 13,197,988 (3,710,086)

19. Risk management

Overview

The Group and has exposure to the following risks from its use of financial instruments:

Credit riskLiquidity risk

This note presents information about the Group's exposure to each of the above risks, the Group’s objectives, policiesand processes for measuring and managing risk, and the Group's management of capital. Further quantitative disclosuresare included throughout these financial statements.




Interest rate risk

Sensitivity analysis – Group and Association

An increase of 100 basis points in interest rates would have increased the loss as follows:

2018 2017

Loss for the year (37,841) (82,513)

A decrease of 100 basis points could have reduced the loss by a similar amount.

Terms and debt repayment schedule 2018 2017

Group and Association Nominal Year of Fair value Carrying Fair value Carrying interest rate maturity amount amount

Instalment sale – Mercedes BenzFinancial Services 10.52 31/10/2019 741,845 741,845 2,251,301 2,251,301

The 2010 FIFA World CupLegacy Trust 6.00 3,000,000 3,000,000 6,000,000 6,000,000

- 3,741,845 3,741,845 8,251,301 8,251,301

The following are the contractual maturities of financial liabilities, including interest payments and excluding the impactof netting agreements:

2018 2017Fair value versus carrying amounts – Accounting Carrying Fair value Carrying Fair valueGroup classification

Financial asset 1 21,034,552 21,034,552 20,397,797 20,397,797Trade and other receivables 2 45,323,230 45,323,230 46,254,344 46,254,344Bank balances and cash 2 7,505,930 7,505,930 8,298,499 8,298,499Interest-bearing loan 3 (3,741,845) (3,741,845) (8,251,301) (8,251,301)Trade and other payables 3 (149,904,358) (149,904,358) (124,681,557) (124,681,557)

- (79,782,491) (79,782,491) (83,715,698) (83,715,698)

2018 2017Fair value versus carrying amounts – Accounting Carrying Fair value Carrying Fair valueAssociation classification

Financial asset 1 21,034,552 21,034,552 20,397,797 20,397,797Trade and other receivables 2 49,621,713 49,621,713 42,466,550 42,466,550Bank balances and cash 2 7,015,577 7,015,577 6,568,841 6,568,841Interest-bearing loan 3 (3,741,845) (3,741,845) (8,251,301) (8,251,301)Trade and other payables 3 (147,510,849) (147,510,849) (119,124,270) (119,124,270)

- (82,313,880) (82,313,880) (57,942,383) (57,942,383)


Accounting classification

1. Fair value through profit or loss.

2. Loans and receivables.

3. Financial liabilities.

Basis for determining fair values

The following summarises the significant methods and assumptions used estimating the fair values of financial instruments reflected in the tables above.

Non-current liabilities

Fair value is calculated based on the present value of future principal and interest cash flows, discounted at the applicable interest rate, which is in line with market rates, at the reporting date.

Trade and other receivables/payables

The fair value of trade and other receivables/payables is estimated as the present value of future cash flows, discountedat the market rate of interest at the reporting date.

Fair value hierarchy

Level 1 Hierarchy represents unadjusted quotes prices in active markets for identical assets or liabilities.

Level 2 Hierarchy represents inputs that are unobservable for the asset either directly or indirectly.

Valuation technique and significant observable inputs

Equity shares – The valuation is based on the market price at 30 June 2018.

Trust units – The valuation is based on the Monte Carlo method of simulation. Unobservable inputs include share pricevolatility, exercise price and interest rate fluctuations.

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21. Going concern

The Group and Association incurred a net loss of R15.9 million and R18 million respectively for the year ended 30 June2018 and, as of that date, the Group’s and Association's current liabilities exceeded its current assets by R99.6 million(excluding income received in advance which will not crystallise as a cash outflow) and R93.3 million. The Group continues to pursue its plans of improving this position and is still determined to achieve a net current asset positionwithin the next few years. It is quite important for this position to be achieved because it would result in the debts beingsettled quicker. The Group has therefore set out to achieve significant operating surplus during the next few years in orderto achieve a net current asset position.

The Group has long-term sponsorship contracts with most of its sponsors and this assures it of future revenue inflows.These sponsorships are expected to continue in view of the long-term nature and the mutual relationships that are longstanding. The Group also continues to exploit a number of revenue opportunities that it identified previously. This is beingcombined with the implementation of its financial recovery plan which is expected to achieve a fair amount of successin the medium to long term.

We are finalising the negotiations for an extension of our broadcast rights agreement. Efforts are being made to ensurethat the parties, SABC and SAFA, will sign a mutually beneficial agreement soon. The Government is also assisting infacilitating the finalisation of these negotiations. We are also negotiating with a few broadcasters for the sale of our satellite rights. With the continuous advancement of technology, the broadcast market has broadened and now includesthe domestic market, rest of Africa, worldwide and internet rights.

We are also negotiating with a number of potential sponsors for the sale of rights for a number of our properties. Theseproperties include junior national teams, coaching education and leagues. We are making some steady progress in thatregard. In September 2018, we launched a sponsorship for our referees by OUTsurance.

During the run-up to the 2010 FIFA World Cup™, FIFA launched a programme named “Win in Africa with Africa” tosupport the development of the game on the African continent. The South African Government committed USD $10million for the African Diaspora legacy programme, specifically for the Caribbean countries. FIFA agreed to administerthe fund through the FIFA account. As part of its African Renaissance philosophy, the South African Government reachedout to the African Diaspora to incorporate them in the programme for them to benefit from the first FIFA World Cup™on African soil. FIFA transferred the funds, USD $10m, to the Caribbean countries, on behalf of the South African Government. FIFA then deducted these funds from SAFA’s share of the 2010 FIFA World Cup ™ ticketing revenue. SAFAis now in negotiations with the South African Government for the reimbursement of this amount to SAFA.

We are in the process of appointing a new agency to manage our entire licensing and merchandising programme. Thisprogramme is expected to bring in additional and unencumbered revenue to the Group. This will be achieved throughthe selling of a wide range of our merchandise via in-house merchandising stores, independent fashion houses and department stores.

The FIFA Forward programme is still in place and we will continue to benefit from it as a FIFA Member Association. TheOperational Costs and Project funding has been increased from US $1.25 million per annum to US $1.5 million perannum. These funds go a long way in covering our normal operational costs and some projects.

In July 2016, CAF advised us that due to its improved commercial arrangements, its members associations will now receive bigger shares of the CAF TV rights. Member Associations are now guaranteed a share of the TV revenue by participating in any of the CAF competitions. CAF has also introduced the annual CAF Grant and each Member Association receives $100,000.00 with effect from 1 July 2017. The financial benefits of this grant commenced in the2018 financial year (1 July 2017). We have already received 2 grants, that is 1 July 2017 and 1 July 2018.These grantswill continue to be paid by CAF, thus assuring us of future funding.

49




20. Related parties

Relationships

Related party balances

Loan accounts - Owing (to) by related partiesCouncil members – Receivable in respect of motor vehicles 3,905,697 4,835,925 3,905,697 4,835,925

The amounts are settled by honoraria payable to membersSouth African Football Association DevelopmentAgency amount due - - 5,655,148 5,626,583

The 2010 FIFA World Cup Legacy Trust (refer to note 15 for terms and conditions) (3,000,000) (6,000,000) (3,000,000) (6,000,000)

Related party transactions

CouncilHonoraria 4,469,680 4,762,497 4,469,680 4,762,497Allowances 3,914,555 1,170,805 3,914,555 1,170,805

8,384,235 5,933,302 8,384,235 5,933,302

Key management personnel remuneration 10,439,029 9,670,708 10,439,029 9,670,708

The 2010 FIFA World Cup Legacy Trust – Grants received 42,505,152 59,200,982 42,505,152 59,200,982

South African Football Association Development - - 18,565 -

Related party transactions are defined as transactions with members of the Council, sub committees and affiliatedentities over which there is significant influence or control.



48



21. Going concern (continued)

The commercial opportunities associated with SAFA Digital are as follows:

• Telco partnership that will benefit both SAFA and its members (Regions)• Advertising served on both the Registration and Competition systems, as well as associated apps• Big data marketing, that is partnering with an agency to direct market to our members• Presenting sponsors for apps, competition website, talent identification• Membership registration fees

Our application for seed capital from the 2010 FIFA World Cup Legacy Trust was approved in November 2018.

The Group continues to vigorously manage its costs by being innovative in the way that it carries out its activities. Fiscaldiscipline is being practised across the full organisation’s spectrum. This is strengthened by, among other tools, operatingwith an approved budget, enforcement of procurement policies and regular financial reporting. We continue to createvalue within the supply chain by working closely with our suppliers.

The Group has also successfully managed to restructure some of its debts by negotiating favourable repayment periods.This was achieved through the healthy partnerships that we have with our service providers.

The Council believes that the Group will be successful in its continuing efforts of growing its revenue base as outlinedabove. It is also satisfied that the Group is able to meet its working capital liabilities through the normal cyclical natureof its receipts and payments. Further, the Council is intensifying its efforts in monitoring the Group’s ongoing workingcapital requirements and minimising expenditure commitments. It is also increasing its focus on maintaining an appropriate level of overheads in line with the Group’s available cash resources.

The Group has a healthy balance sheet which has a significant amount of non-current assets. These assets includeproperty and financial assets invested in a company that is listed on the Johannesburg Stock Exchange (refer to note 10).

The Association, as the football controlling body in the country, is considered to be a national asset. It is due to this statusthat it works very closely with the Government and enjoys its support.

The Council is therefore confident that the Group is a going concern.

22. Post-retirement benefits

The pension scheme has been registered in terms of the Pension Fund Act 24 of 1956. The scheme is a definedcontribution plan. The South African Football Association makes monthly contributions to the scheme at a rate of 15%of members’ salaries as defined in the rules of the scheme. The Association has no liability to the pension scheme as at30 June 2018.

23. Contingent liability

The Association is a defendant in a case where Fli Afrika is claiming R14 million from the Association. This relates to an agreement entered into in 2007 which intended to establish a Joint Venture relating to the 2010 FIFA World Cup™packages. There was a subsequent settlement agreement in 2010 which cancelled the initial agreement.

The matter was heard in the Johannesburg High Court from 28 October to 4 November 2016 and the court ruled inthe Association’s favour. Fli Afrika appealed the High Court judgement and the appeal was heard on 13 June 2018 andjudgement was delivered on 24 August 2018 and the judges ruled in Fli Afrika’s favour. The Association is now appealingthis ruling in the Supreme Court of Appeal (“SCA”) and the appeal date is still to be decided.

5150





21. Going concern (continued)

We continue to have access to various grants which go toward our development programmes. The 2010 FIFA World CupLegacy Trust (“the Trust”) continues to support our development activities. We have successfully applied for regularfunding since 2013 and we expect this funding to continue in the future. This means that the SAFA’s development programmes will continue unhampered. Therefore, management’s efforts can be channelled towards generating fundsfor other programmes and improving the current assets position of the Group.

The National Lotteries Commission also continues to make funds available for some of our activities. We were recentlygranted funding for a Women's Coaching course and we submitted other applications to support our National Teamsthat are preparing for major tournaments. We anticipate to get positive responses to our submissions.

Sport and Recreation South Africa (“SRSA”) has provided us with a grant of R2 million per year during the past 2 years;so this funding is now consistent. These funds are assisting with our Schools’ Football activities, Grassroots programmesand Women's Football development.

SETA / CATHSETA funding: The Association pays towards the Skills Development Levy on a regular basis. It contributesboth on the permanent and non-permanent payroll. Previously we have only received training funds from CATHSETAfor permanent staff training. We have now decided to try accessing funding for non-permanent staff like referees andcoaches courses. We are confident that our funding applications will be considered favourably.

The Government has a number of initiatives that are aimed at encouraging social cohesion and healthy lifestyles andfunding is provided towards this. Football plays a significant role in assisting the Government in its efforts. We will,therefore, work closely with Government so that they can fund our existing football development programmes, especiallyat grassroots level.

The Fun Valley business is a profitable one and these profits will contribute towards the financial recovery of theAssociation. These profits will be used to improve Fun Valley so that we can gain more patronage and improve thebusiness’ profitability. We are now hosting a number of our events at Fun Valley. These include hosting our NationalTeams, coaching courses, administration workshops, tournaments, etc. This is resulting in significant cost savings for theAssociation, especially accommodation costs. The National Technical Centre upgrades are still in progress. We shouldhave at least 3 soccer pitches and a completed boundary wall during the 2019 financial year. This will result in costsavings of hiring soccer fields and travelling costs as well. With the FIFA Forward Programme, we are assured of afinancial allocation for infrastructure upgrades at the National Technical Centre annually. There is also potential of gettingother funders to support the development of the football mother body’s National Technical Centre. The infrastructure development at the National Technical Centre will boost our income statement and balance sheet.

We have established SAFA Digital which will be responsible for the digitisation of our Members’ data and commercialexploitation of this Members’ database.

Broadly SAFA Digital comprises of 8 sub-projects which are:

• Registration system• Competition system• Amateur football results website• Talent identification• SAFA.net• Digital Content team• Social Media Operations• E-Commerce






Detailed Income Statementfor the year ended 30 June 2018

23. Contingent liability (continued)

Based on the legal advice received, the Council is confident that the Association will win the appeal in the SCA.

A former Chief Executive Officer of the Association is suing the Association for defamation of character following hisbanning by FIFA from all football activities. This matter will be heard in the Johannesburg High Court in February 2019.Based on the legal advice received, the Council is confident that the Association will win this case.

The Association is a defendant in various cases relating to unfair dismissal charges. The cases have not been finalised;however, based on the legal advice received, the Council is of the opinion that the outcomes of these proceedings willhave no effect on the Association’s financial statements.

In 2014, the SAFA Congress decided that Schools’ Football will now be organised and run by the Association insteadof the South African Schools Football Association (“SASFA”). SASFA approached the Johannesburg High Court in a bidto have this Congress decision overturned. The Johannesburg High Court ruled that this matter should be heard by anarbitrator. The matter was then heard by the arbitrator in August 2018 and we are now waiting for the arbitrator’s ruling.

Based on opinions received from the Association’s legal advisors, the Association is of the opinion that the cases referredto above will be successfully defended. Accordingly, no provision for the costs have been made in the financial statements.


Revenue

Television broadcasting rights 92,859,400 111,474,222 92,859,400 111,474,222Ticketing revenue 1,203,376 1,964,589 1,203,376 1,964,589National Technical Centre – day visitors and use of facilities 6,579,810 6,617,352 6,579,810 6,617,352

Rental income 226,560 653,068 226,560 653,068Host cities’ income 5,040,053 10,228,070 5,040,053 10,228,070Sponsorship income 148,376,935 167,535,726 134,980,475 148,345,3542010 FIFA World Cup Legacy Trust – grants 49,827,163 59,200,982 49,827,163 59,200,982

3 304,113,297 357,674,009 290,716,837 338,483,637

Other operating income

Other income 2,159,859 1,170,172 2,159,859 1,170,172

Other operating expenses

National Team costs (84,801,300) (79,366,697) (84,801,300) (79,366,697)Competition and leagues costs (31,862,984) (27,931,279) (31,862,984) (27,931,279)Football development costs (41,171,295) (69,366,953) (41,171,295) (51,241,997)Governance costs (10,621,027) (9,133,448) (10,621,027) (9,133,448)National Technical Centre (5,411,751) (5,262,979) (5,411,751) (5,262,979)Other administration costs (141,145,282) (132,160,474) (131,136,652) (130,599,866)Depreciation (8,692,316) (8,162,404) (7,642,492) (7,441,991)

(323,705,955) (331,384,234) (312,647,501) (310,978,257)

Operating (loss) profit 4 (17,432,799) 27,459,947 (19,770,805) 28,675,552Finance income 5 958,711 1,850,376 929,083 1,789,118Finance costs 6 (1,150,648) (1,680,261) (878,202) (1,596,326)

Other non-operating gains (losses)Profit (loss) on sale of non-current assets 74,412 (184,239) 74,412 (184,239)Increase (decrease) in fair value of financial asset 1,686,900 (5,546,333) 1,686,900 (5,546,333)

(Loss) profit for the year (15,863,424) 21,899,490 (17,958,612) 23,137,772

The supplementary information presented does not form part of the Group Financial Statements and Association Financial Statements and is unaudited.

2017 – 2018 Annual Financial Report 55

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National Teams’ Sponsors

Banyana Banyana Bafana Bafana Amajita

Technical Partner Referees’ Partner

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Suppliers and Partners

Competitions’ Sponsors

Broadcast Partner

Corporate Social Investment Partner

Development Partner

2010 FIFA WORLD CUPLEGACY TRUST

Documents

SouthAfrican FootballAssociation...FIFA and the 2010 FIFA World Cup Legacy Trust have continued to assist with capital improvements to the National Technical Centre to assist the Association